The rise of e-commerce has pushed home delivery into a period of growing pains. Brands need to figure out how to make shipping costs cost-effective and create a strategy that increases sales and goes easy on the bottom line.
Shipping carriers increase the shipping rate every year. The demand for parcel deliveries is up, but capacity isn't. That's forcing parcel carriers to charge more for shipments—and slow down their delivery times—at a moment in which customers expect fast, free deliveries from eCommerce businesses.
Small- and mid-sized businesses will inevitably feel the squeeze first, however don't have the same leverage to negotiate rates as their larger counterparts.
Here are some creative tips to cut eCommerce shipping costs for your brand:
Opt for Regional Carriers
Local parcel carriers—those beyond FedEx, UPS, and the USPS—are less than 10% of the parcel delivery market, but they have gained renewed interest as the supply chain crunch impacts prices of other carriers. Even when the national shippers are overwhelmed, regional alternatives like DHL, LSO, or LaserShip might have capacity.
Some companies, especially in the food and beverage space, are reviving traditional post office "milkman" routes to optimize order fulfillment and deliveries. The grocery company Farmstead gives customers discounts on shipping charges when they set up weekly grocery deliveries.
Get Discounted Shipping Rates
Most major carriers and shipping companies have pricing discounts and lower rates available based on shipping volume. This doesn't mean you need to ship hundreds of orders a month to get these reductions. Explore your shipping options by negotiating volume discounts in exchange for your loyalty to a shipping carrier. Of course, the more packages you ship, the better rates you can get.
Ecommerce stores should investigate lower shipping costs, keeping in mind the lower costs does not affect the shipping solution or extend delivery times. Prepaid shipping can get you up to 20% off shipping costs from UPS and FedEx by purchasing a specific amount of shipping labels upfront.
Offer to Buy Online and Pick Up In-Store
Convincing customers to pick up an item in a physical store dramatically reduces costs. Plus, customers are eager to do it. This year, 20% of e-commerce orders were picked up at a store, up from 16.8% in 2020. Even Amazon is trying it. The company is launching a new program called Local Selling, in which small businesses with brick-and-mortar stores can allow customers to pick up products in-store.
Turn to Flexible Warehousing
As the supply chain continues to fracture, many brands turn to startups like Flexe that take an Airbnb approach to warehousing and fulfillment centers. Brands are renting space in strategically located areas to reduce the cost of fulfillment and delivery.
Reduce the Weight of Packaging Material
When it comes to shipping packages, the heavier the product packaging, the more money it will cost to ship. Using lightweight packing materials such as bubble wrap, packing paper, and foam inserts will reduce shipping costs for business owners and increase profit margin. If you are paying for your packaging, do some research. You'll find many shipping services are giving away free packaging and shipping supplies!
While these approaches help brands manage shipping to the customer, the reverse-logistics process—in which customers ship back items they want to return—can be even more complicated.
Though it varies from product to product, returns cost brands $10 on average—in some cases, more than the profit they made on the product.
Brands can deploy tools like Chatdesk Shift, which integrates with order status and return software to decrease the cost of inbound calls coming to your company about order status, returns, and exchanges. Chatdesk lowers the price of a call by up to 80% on average. To learn more about how Chatdesk can help your business drive sales and help build a seamless shipping experience schedule a demo here!